Pensioners, gender and poverty in the Baltic States

THE WORLD BANK Internal Discussion Paper EUROPE AND CENTRAL ASIA REGION Report No. IDP-151 Pensioners, Gender and Poverty in the Baltic States .E Richard Rose February 1995 Office of the Vice President Europe and Central Asia Region Discussion Papers are not formal publications of the World Bank. They present preliminary and unpolished results of country analysis or research that is circulated to encourage discussion and comment; citation and the use of such a paper should take account of its provisional character. The findings, interpretations, and conclusions expressed in this paper are entirely those of the author(s) and should not be attributed in any manner to the World Bank, to its affiliated organizations, or to members of its Board of Executive Directors or the countries they represent. THE WORLD BANK Internal Discussion Paper EUROPE AND CENTRAL ASIA REGION FOR OFFICIAL USE ONLY Report No: IDP- 1 PENSIONERS, GENDER AND POVERTY IN THE BALTIC STATES Richard Rose February 1995 Office of the Vice President Europe and Central Asia Region Discussion Papers are not formal publications of the World Bank. They present preliminary and unpolished results of country analysis or research that is circulated to encourage discussion and comndnt; citation and the use of such a paper should take account of its provisional character. The findings, interpretations, and conclusions expressed in this paper are entirely those of the author (s) and should not be attributed in any manner to the World Bank, to its affiliated organizations or to members of its Board of Executive Directors or the countries they represent. ACKNOWLEDGMENT The Baltic states survey data analyzed here was funded by a grant from the European Commission, Brussels. Survey fieldwork was the responsibility of EMOR (Estonia), LASOPEC (Latvia) and VILMORUS (Lithuania). It is linked with the author's project about Social Welfare and Individual Enterprise in Post-Communist Countries supported by British Economic & Social Research Council grant Y-309 25 3047. Dr. Louise Fox, Senior Economist, Human Resources Division, Country Department IV, Europe & Central Asia Region, the World Bank, gave stimulation and helpful comments. The author alone is responsible for interpretation and contents. TITLE: PENSIONERS, GENDER AND POVERTY IN THE BALTIC STATES AUTHOR: Richard Rose ABSTRACT A pension is paid to older people without regard to their economic and family circumstances, but extensive survey research data from Estonia, Latvia and Lithuania shows that pensioners differ greatly from each other in old age as in their working lives. Two-fifths are married couples; more than a third are widows or widowers living alone; and more than a quarter live with adult offspring. The average wage is a poor guide in setting the cash value of a pension, for the average wage-earner does not earn enough to live on. In economies in transition the three "pillars" on which the household rests are: i) the total pool of income from wages and/or pensions; ii) household production without any money changing hands; and iii) cash earnings from unofficial shadow economies. Two-thirds of pensioners manage to get by with a stream of resources coming in*o their households. Only 7 percent often do without food, needed clothing and heating. The median pensioner faces intermittent difficulties, rarely or sometimes does without basic necessities. Short-term needs require short-term not long-term assistance. Short-term difficulties in getting by or obtaining food, clothing or heat, imply a need for benefits with a duration limited to weeks or months, and individuals should have to re-register a claim if they are continuously in need. Gradually raising the retirement age is the easiest way to finance social assistance for the elderly most in need. In September, 1994 the European Court of Justice ruled that employers in the European Union must have the same age of retirement for both men and women. Any attempt to target poverty as a problem should not be confined to a single age group in society. The majority of people who have difficulty in getting by are not pensioners but adults of working age or their children. s Table of Contents Pa2e No. I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 II. Distinctive Features of Pensioners in Transition Economies . . . . . . . . . . . . . 2 III. Pensioners and TheirHouseholds ............................ 5 IV. Streams of Resources of Pensioners . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 V. Poverty Problematic: Getting By Essential . . . . . . . . . . . . . . . . . . . . . 13 VI. Comparing Pensioners and the Working Age Population ............. 21 VII. Policy lm plications .................................... 23 References n27 Tables Table 1: Household of Pensioners by Gender . . . . . . . . . . . . . . . . . . . . . . . . . 6 Table 2: Responsibility for Housework by Gender of Pensioners . . . . . . . . . . . . 11 Table 3: Portfolios of Economies in Pension Households ................ 12 Table 4: Variations in Material Goods Between Households ............... 16 Table 5: Getting by with Multiple Economies . . . . . . . . . . . . . . . . . . . . . . . 18 Table 6: Frequency of Doing Without Basic Goods . . . . . . . . . . . . . . . . . . . . 19 Table 7: Differences Between Pensioners and Working-Age Population ........ 22 Annexes Annex 1. Appendix Table 1: Key Characteristics of Older People by Country Annex 2. Figures PENSIONERS, GENDER AND POVERTY IN THE BALTIC STATES I. INTRODUCTION 1. A pension is not a person; it is a legal construct, a payment authorized by law to individuals who have reached a fixed age. To describe individuals as "pensioners" is misleading; it implies that the pension paid by the state is an individual's only source of income. Although economic circumstances differ, in economies in transition as in advanced industrial societies, an individual's pension from the state is normally not a person's sole economic resource. 2. Poverty is a political construct; its definition and scale is disputed. The definition of poverty in the United States would appear a middle-class income in many developing countries. In market economies today, old people are usually not in poverty. Whether this is true in the Baltic states too is a question that this paper will address with empirical data. 3. Older people receiving a pension differ from each other in old age as they did in their working lives. Major differences can be found between younger pensioners still able to work and draw a pension and older pensioners who may depend upon others for vital care. Because the life-expectancy of women is more than half a dozen years greater than men, pensioners are disproportionately women. 4. The significance of a pension, i.e. a statutory income paid at the end of decades of employment, is variable. When pensions were first introduced early in this century, people who became pensioners were entitled to do so because they were too old to work. In Britain, for example, a person had to be above the age of 70 to claim a pension at a time when the average life-expectancy was 58. Receipt of a pension was means-tested: a person had to be poor to the point of destitution in order to qualify for a regular income. Today, the great majority of people in receipt of pensions are physically active. 5. How relevant are these analytic distinctions to the position of people receiving pensions in Estonia, Latvia and Lithuania today? This papers offers answers by analyzing a unique sample survey of more than 6000 people between state and market in autumn, 1993. The empirical data is used to identify differences between pensioners in terms of gender, household composition and resources from informal and unofficial economies as well as their pension. The extent to which older people are able to get by or avoid destitution is a third concern. Page 1 Comparisons made between pensioners and those not of pension age show the extent to which the risk of destitution is greater among the population of working age or of pension age. II. DISTINCTIVE FEATURES OF PENSIONERS IN TRANSITION ECONOMIES 6. By definition, economies in transition have not yet become identical with established market economies. The legacy of a nonmarket economic system is particularly evident in such fields as pensions, for in historically planned economies, social security systems were not financed as in a market economy, the benefits offered were unusually generous by comparison with advanced industrial societies in OECD, and they were meant to be funded on a pay as you go basis (see Fox, 1994: 2ff). The following distinctive features are relevant here: The effective age of retirement is relatively low, and dependency ratios are high. The official age of retirement is 60 for men and 55 for women in the Baltic states as in other East and Central European economies in transition. This is low by the standards of many OECD nations. Special provisions for early retirement make it possible for some people to claim a pension before they reach the official retirement age. Even though life expectancy in the Baltics is 8 to 10 years lower on average than in Scandinavia, individuals who survive to retirement age can expect to draw a pension for an average of about 18 years--and early retirement increases claims on pension funds (cf. World Bank, 1993: 42; OECD, 1994: 46f). Combined with the relatively low birth rates of transition economies, the result is a high and rising ratio of people of pension age to those of working age (Fox, 1994: Table 1). Absence of savings in private or occupational pension funds. In nonmarket economies, the shortage of goods sometimes resulted in involuntary savings. The monopoly position of the state prevented individuals and employers from investing savings in private pensions, as could be done in a market economy. The value of savings at the start of the transition period has been wiped out by inflation and, in the Baltic states, the further complication of a switch from the rouble to a national currency. Since the state guaranteed a relatively high pension in relation to wages, destabilization of,state-funded pensions is thus more severe in transition societies than in a market economy. Non-pecuniary assets are particularly important in nonmarket economies. Because of shortages of goods in shops, people in nonmarket economies learned how to produce goods themselves or with the help of friends. This was especially true of such basic commodities as food and building and repairing houses, primary entries in the budgets of poorer people. A majority of households in societies in transition grow some of their Page 2 The Baltic States: Pensioners, Gender and Poverty food on plots near their house, and a large proportion arrange for housing repairs themselves or with the help of friends. This is an important cushion against poverty not normally reckoned in evaluating the economic condition of people receiving pensions. Fiscal pressures--spending more money and collecting less in taxation--make the restructuring of pensions virtually inevitable in every economy in transition. In an effort to increase social protection during transition, pension payments have been liberalized and have risen as a proportion of the tax base, that is, the officially recorded national product. Since pensions are financed on a pay as you go basis, the state is under pressure to raise more money in taxation. But concurrently, the tax base has contracted due to privatization and fall in output of state enterprises. The capacity of transition governments to collect taxes from individuals and new enterprises is not yet adequate to the new situation (see e.g. Tanzi, 1992). 7. The position of the Baltic peoples. In the period of the former Soviet Union, the Baltic states were relatively well off in economic and social terms by comparison with many other parts of the USSR. But nonmarket economies did not have the same living standards as advanced industrial societies, because the nonmarket command economy generated pathologies such as shortages and "stressful inefficiencies (see Kornai, 1992; Rose, 1994: 42ff). The World Bank (1993a: 326) classifies the Baltic states as in the top group of economies in transition, but on a global basis as "upper middle income", that is, in the same category as Brazil, Mexico and Korea, countries in which rapid economic development has not yet led to the development of elaborate social security provision in old age. 8. Whatever the average standard of living, some people will be better off and some worse off than the average. Pensions, gender and poverty are about divisions within countries. This paper explores the extent to which there are differences in the capacity of older people in Baltic states to maintain their welfare, and the extent to which poverty is related to gender, particularly the circumstances of widows living alone in extreme old age. 9. Official statistics about pensions are inadequate to understand the condition of older people in Baltic states today, for it is misleading to treat a state pension as the only economic resource of older people. A pension is only one stream of income. Older people may themselves be in work or live in households with adult offspring who are in work, thus making a pension a supplementary cash income for the household. To understand how older people Page 3 The Baltic States.: Pensioners, Gender and Poverty protect themselves in times of transition, we need to look at the multiplicity of resources that they can make use of. 10. The State/Market surveys of the Center for the Study of Public Policy, University of Strathclyde, are designed to monitor the behavior of individuals and households in societies in transition. The program covers 15 post-Communist countries, including the three Baltic states. The questionnaire collects reliable and valid empirical data about activities not covered by official statistics because outside the official tax net or not monetized, as well as standard social and demographic data. 11. The Baltic states survey was unusually large, 6,136 respondents, because it sampled all major nationalities resident there in a multi-stage sample stratified by region, town size and other relevant census characteristics.' Almost equal numbers of respondents were interviewed in Estonia, Latvia and Lithuania. Within each state, Russian-language as well as Baltic-language questionnaires were used.2 The fieldwork was undertaken by EMOR (Estonia), LASOPEC (Latvia) and VILMORUS (Lithuania), with interviewing between 7 September and 12 October 1993 (for full technical details, see Rose and Maley: 1994: 68-74). 12. Because the paper focuses on differences among pensioners and there were limited differences between countries, all persons of pensionable age are pooled to create a large data base for analysis, consisting of 1,319 people of pension age in the Baltic states. The interested reader will find in Appendix Table 1 results by countries of major variables examined here. The study concentrates upon individuals of pension age, men age 60 or more and women age 55 or higher. The Baltic survey would that 4 percent of women drawing pensions were under the normal retirement age, and 17 percent of men. Thus, nine percent of pensions being paid went to individuals below the age of 55 for women or 60 for men. The Baltic survey data analyzed here was collected with the aid of a grant from the European Commission under the Copernicus program for Cooperation in Science and Technology (COST) with Central and East European countries. The research is part of a wide-ranging project examining Social Welfare and Individual Enterprise in Post-Communist Countries, supported by the British Economic & Social Research Council. The author is solely responsible for the interpretation and conclusions of the paper. In this paper the term Russian describes people whose nationality is Russian or that of another former republic of the Soviet Union rather than that of a Baltic state. Page 4 The Baltic States: Pensioners, Gender and Poverty III. PENSIONERS AND THEIR HOUSEHOLDS 13. A pension is normally paid to an individual, but the adequacy of a pension can only be assessed in the light of the recipient's household circumstances. If a person lives alone, a pension can be the primary source of income. A married couple normally receives more money because the wife will have a pension in her own right because she too has been in paid employment. In historically planned economies, including the Baltics, the labor force participation of women has been much higher for a much longer period of time than in the average OECD country (see European Center, 1993: 315-28). In a household with two generations of adults, a pensioner's income supplements that of adult offspring in regular employment. 14. Heterogeneity of circumstances begins at home: there is no such thing as a typical pensioner household, for older people are divided into three different groups (Figure 1). The largest group, two-fifths of pensionable age, consists of couples living together. Not only are both husband and wife likely to draw a pension but also the couple can look after the everyday needs of each other, and care for each other in illness and emergencies. "Priceless" personal social services are given free within the family; it is not necessary for the state to provide such services (Rose, 1986). Most couples living together are not infirm; the husband is likely to be in his sixties and the wife in her fifties or sixties 15. Almost a third of Baltic pensioners live in a multi-generational household, in which at least one other member of the household is usually a wage-earner. The economic needs of multi-generational households are different from a stereotype married couple, for housing costs and other fixed household costs are shared between the generations, and where one or more people are in regular paid employment, then a pension is not the primary income of the head of household. Older women may assist working members of the household by undertaking unpaid but important domestic housework, and widows living with a daughter or son have an able- bodied person to look after them in emergencies. 16. The proportion of Baltic pensioners living in a multi-generational household is two-thirds or more greater than in Northern European countries such as Sweden (5 percent) or West Germany (17 percent). It is also higher than in the poorest countries in the European Union, such as Greece and Portugal (25 percent) and Ireland (26 percent) (cf. Bureau of the Census, 1992: 54). This implies that a substantial fraction of the multi-generational households are not formed by choice but as a consequence of housing shortages forcing families to "double up". Page 5 The Baltic States: Pensioners, Gender and Poverty Further, the proportion of older people for whom a pension is a supplementary income in a multi-generational household is likely to fall as incomes rise nationally. 17. Mortality radically changes household status. The 30 percent of pensioners living alone are usually not doing so by choice but because they survive the death of their spouse. For a person living alone, a pension is likely to be the sole or primary source of money income in the household. A person living alone may need less food and other consumer goods, but still needs help from others when ill or infirm, and cannot get it within the household. 18. Because women tend to be the younger partner in marriage, they qualify for a pension five years earlier than men and live longer too, there is a strong gender bias among pensioners. Women are likely to have two phases in retirement. (Table 1). Just over two-thirds of Baltic respondents of pensionable age were women. For a woman, the first stage of retirement, living with a husband, is followed by widowhood. A majority of Baltic women of pension age are survivors. Whereas four-fifths of men are living with their wife, a majority of women are on their own or doubling up with an adult offspring. Only a sixth of male pensioners are on their own, for men are usually the first to die. Table 1: Household of Pensioners by Gender Women Men Married couples 30 60 Multi-generational couples 12 20 Survivor, multi-generation 20 4 Living alone 37 16 100% 100% Source: As in Figure 1; Baltic State and Market survey Page 6 The Baltic States: Pensioners, Gender and Poverty 19. The significance of a pension for household income depends upon the number and employed persons in a household, since households pool their resources (Figure 2). In a multi- generational household pensioners are living with relatives of working age who can earn the primary income of the household. When pensioners live with younger members of their family, their own advancing years do not deprive the household of earnings. Moreover, the death of a spouse does not deprive the widow of helping hands within the household. Multi-generational households offer elderly people terminal security, for they have a much larger cash flow than a household of pensioners on their own, and there are relatives at hand to look after the welfare of a parent until death. 20. Multi-generational households account for one-fifth of households with pensioners in the Baltics. They are divided almost equally into those having an unmarried offspring living with parents and those with a married couple living with parents or a widow. For this reason, there is a substantial variation in the number of jobs in such households; just over half of multi- generational households have only one income from a working non-pensioner, a third having two incomes and the rest have three or more. 21. The relatively early age of retirement enables a 55-year old women or a 60-year-old man to be physically able to work. Inadequate earnings, inadequate savings and low pensions are a spur to work. The number of working pensioners is substantial, 22 percent of those of pension age, and in almost a quarter of these households there are two people at work. The number of working pensioners is increased if one takes into account people drawing pensions below the normal retirement age. Nonetheless, the great majority of people in receipt of pensions are not in employment, for working tends to be confined to 'younger' older pensioners. Among women under 60, one in three are in work, whereas among people age 65 or higher, only one in ten are still working. 22. A person reaching retirement age usually does not have to seek a new job. More than half of pensioners still in work remain in the job they held before claiming a pension. In autumn, 1993 this meant they were working in one or another branch of the public sector. The majority who have changed jobs are in second economy employment. Working pensioners are widely distributed between manual and non-manual, skilled and unskilled jobs. Two-thirds of employed pensioners are women, almost the same as their proportion among pensioners as a whole. The distinctive feature of working pensioners is their age, an average of 62 years, more than three years below the mean for all pensioners. Working pensioners are happy to remain Page 7 The Baltic States: Pensioners, Gender and Poverty in employment; 86 percent report being very satisfied with their work, 10 percent higher than among those of working age. 23. The households of retired couples, in which neither husband nor wife work, constitute a third of pensioners. Couples can rely upon each other for help with everyday activities and for companionship. The pension of the husband and the wife are the only sources of money income for the month. For convenience, this group also includes a small proportion of persons who are in the same family, for example, a retired brother and sister, who are related and both are without an income. The households of couples are average in age for pensioners and widely dispersed in all types of cities and rural areas. 24. About a quarter of pensioned people in the Baltics are doubly at risk, for they not only rely upon a pension rather than a wage, but also they live alone without a job. Five-sixths of older people living alone are women, normally widows who have had this life style forced on them after decades of living with a partner. The group is relatively old: the mean age for those living alone is 68 years. 25. The households of pensioners are dynamic, not static; they differ for couples living on their own and for those in multi-generational households. Among couples on their own, immediately after retirement there is a fair chance that one may remain in work for at least a few years, producing earnings to augment the household's two pensions. In the second stage, the household has two incomes from two pensions. In the third and final stage, a widow lives alone within only one pension as a source of income until advancing years leads to death. 26. By contrast, in a multi-generational household, there is always a wage or salary in the household. The maximum number of income earners is four, a pension couple and two married offspring. Whereas a pension couple faces a steadily diminishing potential for earning, a multi- generational household has a much higher floor, for there are always two people and two incomes (a wage and a pension) and very likely more. When a widow leaves the household through death, even then the household may remain multi-generational if her offspring's children are becoming adults and remaining at home. Page 8 The Baltic States: Pensioners, Gender and Poverty IV. STREAMS OF RESOURCES OF PENSIONERS 27. The standard state pension is not the only resource that older people normally rely upon. In a modem market economy most older people have a plurality of savings, such as: a basic state pension; an income-related pension from an employer or occupational pension fund; ownership of a house or flat; and/or interest and dividends from cash savings and investments in mutual funds or stocks. In Britain, older persons who rely solely upon the state for their income are less than one-fifth of those of pensionable age. The median household with a pension has at least four streams of income and the proportion with five or more streams of income will increase as middle-age cohorts with a greater variety of savings reach retirement age (Rose, forthcoming). 28. A new World Bank study, Averting the Old Age Crisis: Policies to Protect the Old and Promote Growth (1994), recommends a three-pillar approach to household income in old age: a flat-rate publicly managed pension funded from general revenues; a fully funded privately managed mandatory occupational pension scheme, linking benefits to contributions; and voluntary personal savings. 29. However, in societies that have been a nonmarket economy for two generations it is not possible for people currently at pension age or approaching it to have a fully funded pension, let alone three different forms of savings (see Holzmann, 1992; Fox, 1994). Relying upon three pillars in retirement--state, private funds and household initiatives--is a consequence of living in a civil society in which there are multiple concentrations of capital. It will take households and the state several decades to accumulate the resources necessary to fund pensions in accord with the three-pillar approach. 30. The problem facing older people here and now, is: How to mobilize enough resources to live after retirement? To cope amidst the turbulence of transition, people can make use of skills learned in order to cope with the problems of a command economy, skills that generated not just two black and white economies, but a variegated "rainbow" of economies,(Grossman, 1977; Katsenelinboigen, 1977). 31. Older people in the Baltic states rely upon a multiplicity of economies to augment their state pension. This arises from necessity, for less than a quarter of Baltic people say that regular employment provides enough to meet their needs (Rose and Maley, 1994: Q.47). When earnings from a regular job are inadequate, a pension that is only a fraction of earnings will also Page 9 The Baltic States. Pensioners, Gender and Poverty be inadequate. But if the pension is not the sole resource of the household, the situation is altered. 32. The three pillars of pensioners are not different streams of income from the official economy but three radically different categories of economies: i. Official economy, receiving money from a regular job or pension; ii. Social economies that are unrecorded and no money changes hands, such as growing food or exchanging help with friends; and iii. uncivil economies, e.g. cash-in-hand second jobs, "tips", etc. Within each category, there are several different forms that economic activity can take, resulting in a total of nine different "economies" (see Rose, 1993). Almost all Baltic households are engaged in both the official and social economies, and about half are also involved in one or another uncivil economy (for copious details, see Rose and Maley, 1994: 11-18). 33. In households with pensioners, 95 percent draw resources from to two or more economies; the number varies with the composition of the household. In multi-generational households and in households with a working pensioner, almost three-quarters can draw resources from four or more economies. But in households of couples without work, two-thirds rely on fewer economies and among lone pensioners, two-fifths rely on only one or two economies. Hence, lone pensioners are active in an average of a little more than three economies,where multi-generational households and those with an employed pensioner are active in four different economies. 34. Growing food is one familiar example of non-monetized social production. While every pensioner must eat, it is not necessary to spend money to obtain food. In economies in transition, a majority of households have been part-time growers of food for their own consumption, because they could not rely upon shops to sell food when they wanted it. In the Baltics, a majority of households grow some food. Pensioners have more time and are therefore more likely to spend several hours a day in season growing food. Among those with a plot of ground, 77 percent report growing at least a fair amount of their own food. Page 10 The Baltic States: Pensioners, Gender and Povert 35. Domestic chores or "housework" is another example of a nonmonetized nonwageO activity for which the principal resource required is time, which pensioners have in abundancc. Housework is also gender biased rather than being shared equally between men and women. Since housework is necessary whether anyone in the house is employed, women never retire, in the sense of stop doing housework. Three-quarters of women reported that they are responsible for housework, and nearly half of retired men said their wife did the housework (Table 2). In multi-generational households, a majority of women reported that they were responsible for the housework; only a tenth of daughters took responsibility there. If the definition of work is expanded to include non-waged housework, then the economic activity of older women is substantial, whether simply looking after themselves, looking after their husband or looking after their offspring and grandchildren. Table 2: Responsibility for Housework by Gender of Pensioners Women Men I am 76 31 Spouse 7 47 Another woman 4 2 Another person 2 1 Worked shared fairly 11 19 100% 100% Source: As in Figure 1; Baltic State and Market survey 36. Alternative coping strategies. Whatever the age of its members, in economies in transition households need a portfolio of resources to cope, that is, meet their everyday needs. If income Page 11 The Baltic States: Pensioners, Gender and Poverty from officially recognized employment is inadequate, then people can be enterprising, combining income from official and untaxed "uncivil" employment. If money is scarce in a community, making it hard to earn money on the side, then a household can rely upon a defensive portfolio, in which the nonmonetized production of food or exchanges with friends of services and goods supplement what is obtained with a regular income or pension. Marginal people cannot be accounted for in official statistics because they are so remote from the market economy that they do not consider any money income as important. 37. The coping strategies of pensioners are distinctive, for very few pensioners have the energy and opportunities to be enterprising, earning money in shadow economies. People of working age are almost five times more likely to be enterprising (cf. Table 3). In all age groups, very few pensioners are marginal. Estonia, Latvia and Lithuania are not third world countries in which a large segment of the population lives outside the money economy; they are relatively poor industrialized societies, in which a money income from a pension or job is a necessity, even if inadequate for meeting everyday needs. Table 3: Portfolios of Economies in Pension Households Alone Couple Employed Multi-gen'l All Working pensioner pension age Enterprising 4 3 8 8 5 24 Defensive 54 51 36 37 46 42 Marginal 6 3 6 4 5 9 Vulnerable 36 43 49 51 43 24 Source: Baltic State/Market survey; Enterprising: Uncivil and official economies; Defensive: Social and official economies; Vulnerable: Solely official economy; Marginal: Social and/or don't know what is important. Page 12 The Baltic States: Pensioners, Gender and Poverty 38. When pensioners live alone or as a couple, more than half are defensive, usually growing a significant amount of their own food, doing household repairs and relying upon the exchange of services with friends, neighbors and relatives. Contrary to what is assumed in studies of unemployment , - non-employment in market economies, retirement from work has not meant social isolation i )r pensioners. Instead, it has increased their dependence upon social networks and household production outside the market. 39. The group potentially at risk of poverty are not those relying upon household production, since it is reliable, but those who are vulnerable because relying exclusively upon income from their pension and/or earnings of others in the household, which can fluctuate in value with the cost of living. Pensioners in work or in a multi-generational household are almost twice as likely as adults of working age to be vulnerable. Increased income leads to greater reliance upon the official economy and thus, ironically, to greater vulnerability. Amidst the uncertainties of a system in transition, relying on a pension or regular earnings does not enhance security, for pensioners cannot be sure that their pension will not be squeezed by inflation or subsequent budget pressures, and that a job, or an enterprise, may not disappear as a consequence of the move to the market. A more effective form of "insurance" would be to rely on resources outside as well as inside the official economy. 40. To ask--which portfolio is most important for coping by pensioners?--is to miss the point. The strategies that pensioners tend to rely upon vary with the composition of their household. In households with less money income defensive portfolios are more important and in households with more income people with more cash in hand are also more vulnerable to income fluctuations. V. POVERTY PROBLEMATIC: GETTING BY ESSENTIAL 41. The definition of poverty is disputed in modem market economies. Every review shows an absence of consensus among social scientists about how to define poverty in theory, and how to measure it in practice (see e.g. Polish Statistical Association, 1992; Journal of Social Policy, 1987). Poverty may be defined in absolute terms, as an absence of specified resources for use in everyday life. Alternatively, it can be defined in relative terms. Defining poverty as an absolute lack of resources makes it possible in principle to eliminate poverty if no one does without them; it also makes it possible for more than half the population to be absolutely poor. By contrast, a relativistic definition of poverty as having less than half the average income makes Page 13 The Baltic States: Pensioners, Gender and Poverty it impossible to eliminate poverty on any normal distribution of income; it also makes the proportion described as poor a limited fraction of the population. 42. In market economies poverty tends to be measured by money incomes of the household, and the non-cash resources of groups such as farmers are readily monetized by reference to market prices. A money measure of poverty presupposes that poor households depend upon the purchase of goods and services to maintain themselves, that money values are relatively predictable across a period of 12 months or more; and relative prices are stable from one local market to another. 43. In societies in transition everyone is at risk, but not in the same way. Pensioners are distinctive because they have stopped or will soon stop paid employment completely. Thus, unlike younger people, when one income is insufficient they cannot be expected to get a job in the shadow economy. Secondly, because a pension is financed by current public revenues, pensioners are very directly at risk if there is a fiscal crisis due to a shortfall in the collection of tax revenue or high level of spending. They are also at risk from government policies intended to get rid of the crisis, such as a squeeze of public expenditure. Unlike workers whose earnings ultimately depend upon their enterprise succeeding in the market, in a pay as you go system pensioners depend upon government's capacity to collect taxes, a capacity far from adequate in economies in transition. In addition, older women are at risk of losing an income from the death of their spouse, leaving them to survive on their own. 44. Differences in household composition are likely to create differences in the capacity of households to cope. It is reasonable to hypothesize that a pensioner in a multi-generational household is likely to be best off because of the presence of active younger people in regular employment, and a household with a working pensioner is also relatively advantaged. Insofar as each adult contributes significant resources to a household, then a married couple in retirement may be better off than a lone pensioner. 45. Material circumstances. Differences existed in money incomes in historicall'y planned economies (see Atkinson and Micklewright, 1992)--but so too did differences in power, privilege and the control of valued resources that money could not buy. Hence, a detailed multivariate statistical analysis of Russian households at the start of transition found that there was no significant relationship between money income and the capacity of households to avoid severe economic difficulties (see Rose and McAllister, 1993; 1994a). Page 14 The Baltic States: Pensioners, Gender and Povert, 46. Because of the legacy of the Soviet Union, money measures are problematic as measures of poverty until the transition is well advanced, because people can continue to rely upon multiple economies to produce goods within the household without any money changing hands or to obtain things in unofficial economies. Insofar as money income is meaningful, the value of a pension to an older person depends upon how many incomes a household has. 47. The Baltic State and Market surveys collected data on the money incomes of individuals and households in the month preceding the interview (See Rose and Maley, 1994: Qs. 241, 242). Given the impact of inflation upon money values, the data can best be interpreted by making an index for individual and household income that sets the mean income at 100 within each country. This avoids the problem of trying to figure the value of a "constant" notional basket of goods. This also makes it possible, notwithstanding differences in currencies and problems of exchange rate, to pool data for all three countries. The use of an index of relative income is consistent with the emphasis upon relative deprivation in the literature on pensions and poverty. 48. Since a pension is less than a full wage, the mean income of households with pensioners on average is two-fifths lower than the average for all households. More relevant here is the fact that the income of pensioner households varies radically with household composition (Figure 4). A couple has twice the income of a pensioner living alone. Households of retired couples also have more discretionary income than lone pensioners, since many household goods (for example, a television set) can be shared. If one of the pensioners has some form of employment, the income of the couple is increased by two-fifths compared to what a couple would otherwise have. A pensioner living with offspring in a multi-generational household shares in the highest family income, but because there are more mouths to feed and clothes to buy than for a couple, such pensioners are not necessarily better off. Moreover, some multi-generational households have only one wage-earner, for example, a widow and a daughter living together. 49. Ownership of consumer goods provides another way of evaluating the material well-being of households, since a color television set, a car or a telephone requires money to purchase; it cannot be produced at home. Such goods are desired and common in the great majority of OECD countries but not so widespread in societies in transition. When the material possessions of pensioners as a group are compared with non-pensioners, there are differences in the predictable direction: households without pensioners are more likely to have consumer durables (Table 4). This pattern is also found in market economies, albeit at a higher level of ownership, for older people are less active as consumers; and older women are much less likely to be able to drive a car (see Falconer and Rose, 1991: chapter 9). Page 15 The Baltic States: Pensioners, Gender and Poverty Table 4: Variations in Material Goods Between Households Alone Couple Employed Multi-gen'l All Working pensioner pension age (% in household having) Color television 44 64 71 80 64 81 Car 8 27 30 39 26 44 Telephone 51 60 64 78 63 63 Source: As in Figure 1. Baltic State and Market survey. 50. Big differences are found in consumer goods between different pensioner households. A widow or widower living alone is much less likely to have a color television set, a car or a telephone than a married couple. The difference between a lone pensioner and a couple is greater than that between a married couple without employment and a household in which a pensioner is still employed, emphasizing the importance of advanced age and widowhood for withdrawing from styles of life common to most people in society. Multi-generational households live at about the same material standard as households without any pensioner, and a pensioner living with offspring is likely to be better off than a pensioner in employment. 51. In the Baltic states, housing is either owned by the family or by the state or local council. Rental, cooperative and employer-provided housing is of very little importance (Rose and Maley, 1994: Q. 65). Home-ownership is usual for four-fifths of Lithuanians; in Estonia Pud Latvia, households divide almost equally between public and family-owned housing. 52. Tenure does not discriminate between the households of pensioners. Overall, 41 percent live in a home owned by their family, and 50 percent in a publicly owned house. Differences between households are small and form no consistent pattern. Among lone pensioners, 36 Page 16 The Baltic States. Pensioners, Gender and Povery percent own their own home, as do 40 percent of multi-generational families, 42 percent of employed pensioners and 44 percent of pension couples. 53. The existential problem: getting by. In every economy, regardless of the level of living, every household has the existential problem of matching resources to consumption through earning and spending money, living as a self-sufficient peasant in the forests or by mixing monetized and non-monetized production and consumption. The distribution of consumer goods emphasizes that this minimum is not the bare subsistence standard in low income countries of the world. But the standard is low relative to most OECD countries. 54. In economies in transition, most people are risk averse, seeking to maintain minimum standards indefinitely by a mixture of monetized and non-monetized resources. Pensioners are. especially likely to be risk averse, because they do not have the years, the energy, the capital or cash flow to act as entrepreneurs investing (on their own behalf or for old age) in activities in the market economy. The goal of risk averse people is to get by, that is, to maintain an equilibrium between resources and consumption, whatever their level of living. 55. A household can get by indefinitely, whatever its portfolio of resources, as long as it does not have to consume capital or run into debt. The State/Market surveys thus measure getting by with a question that asks: In the past year has your household saved money, just made ends meet, spent savings, borrowed money from friends, relations, or had to spend savings and also borrow money? Two-thirds of pensioners have managed to get by, not because their pension was adequate but because the total portfolio of resources available to them is adequate for their everyday needs (Table 5). Pensioners are just as likely to get by as are people of working age. Page 17 The Baltic States: Pensioners, Gender and Poverty Table 5: Getting by with Multiple Economies Pensioners Non-pensioners Alone Couple Employed Multi- All All gen'l (per cent) Just get by 64 62 74 69 67 69 Spent savings 25 24 19 17 22 16 Borrowed 6 9 3 7 6 8 Spent savings 5 4 4 6 5 7 & borrowed 56. The capacity of pensioners to get by is very little affected by household composition. Employed pensioners are slightly above non-pensioners in their capacity to get by, and those in multi-generational households are average. Even though lone pensioners have a lesser material standard of living than those in multi-generational households, they are almost as likely to get by. This underscores the fact that an equilibrium between resources and consumption can be maintained at very different standards of living. 57. When people have few resources, getting by is most likely to be achieved by doing without. In the absolute sense, poverty can be defined as doing without everyday necessities of life, such as food, heat and electricity, and clothing. Concentrating on essentials dbviates the formidable technical problems of constructing "household equivalence" incomes for different types of pensioners as well as all the problems of using money measures in societies in transition. The Baltic State/Market survey asked every respondent: In the past year, has your household had to forego often, sometimes, rarely, never: food, heating and electricity, clothes or shoes you really needed, petrol for a car, or something the children really needed? Page 18 The Baltic States: Pensioners, Gender and PovertY 58. Since pensioners normally do not have young children or a car, the three appropriate measures of absolute destitution are food, heating and electricity, and clothing and shoes, goods that are disproportionately important in the budgets of people in poverty. The median pensioner reported that her or his household sometimes had to do without food and without clothing. An absolute majority reported that they never did without heating and electricity, implying non- market pricing of housing and energy in the Baltic states (Table 6). The pattern of doing without is similar to that in Russia, Belarus and the Ukraine, but higher than in former Communist countries in Central Europe, such as the Czech Republic. Table 6: Frequency of Doing Without Basic Goods Pensioners Working Age Alone Couple Employed Multi- All All gen'l (% doing without) Food Often 44 39 26 25 34 20 Sometimes 33 30 31 34 32 28 Rarely 12 14 15 22 15 22 Never 11 17 28 20 18 31 Clothing shoes Often 41 45 36 34 40 25 Sometimes 28 23 23 28 25 28 Rarely 10 15 16 16 14 20 Never 20 17 26 22 21 27 Heating, electricity Often 13 13 11 9 12 7 Sometimes 20 19 17 17 19 14 Rarely 11 13 15 11 13 12 Never 55 55 57 63 57 67 Page 19 The Baltic States: Pensioners, Gender and Poverty 59. Pension households differ in their degree of doing without. Where no one is employed, pensioners are more likely to be often without food or clothing than in pension households where someone is in work. In households where a pensioner is in work, the likelihood of never having to do without food, clothing or heating is similar to the non-pension population. Multi- generational households also assure pensioners almost the same access to basic goods as in non- pension households. 60. In economies in transition, a large proportion of the population is likely to have to do without goods at least some of the time, because of straitened financial circumstances and/or shortages arising from problems of an incomplete transition. Pensioners are a special case, since their risk is not intermittent loss of income due to unemployment or non-payment by their employer. Pensioners permanently outside the labor force run the risk of being constantly destitute. 61. We can measure the extent of deprivation within a household by scoring 3 those saying they often do without a commodity; 2, sometimes; 1, occasionally; and 0, never. The deprivation scale thus ranges from 9 (often doing without food, heating and clothes) to 0 (never doing without these three goods). 62. The deprivation that exists among pensioners is widespread but intermittent rather than frequent and concentrated in a substantial number (Figure 5). Only 7 percent are destitute, often doing without food, heating and clothes; less than a quarter sometimes or often do without these goods (score 7-9). The distribution is skewed toward the lower end of the scale (Figure 5). Among pensioners, 10 percent never do without basic goods, and more than a third are only rarely bothered by doing without maximum score of 3. The median pension household is likely to do without one or two goods sometimes and the others rarely. The level of destitution is lower among households of working age and even more skewed toward rarely doing without. 63. There are differences between pension households in the extent of deprivation (cf. Table 6). The highest incidence is found among pensioners living alone. In this group, 26 percent are sometimes or often doing without food, heat and clothing (score 7-9) and the median household is sometimes or rarely doing without all three goods (score 5). Deprivation is least likely to be found in households where a pensioner is in work; 15 percent report they never do without anything and more than two in five are only rarely inconvenienced. Differences in the amount of deprivation should not, however, obscure the fact that there are substantial differences Page 20 The Baltic States: Pensioners, Gender and Poveroy within each category of households, and in each grouping the majority of households are not frequently facing deprivation. 64. When people must intermittently do without, it may be because of a shortage of goo0s locally or because of a shortage of money. The former implies a macro-economic solution, whereas a shortage of money must be met by the household adapting its behavior. One response is to stretch goods, for example, repairing and wearing clothes longer. A second possibility is reducing use, for example, lower the temperature of a flat or heating fewer rooms in a house, or reducing quality, eating cheaper foods or only home grown foods. A third alternative i, sacrifice, doing without something completely or letting others in the family maintain theii consumption at one's own expense. Paradoxically, when most people are sometimes doing without, then there is a form of equality, for few are better off or worse off than those who must occasionally mend and make do or do without something temporarily. 65. The logic of social protection is not to equalize income between (or within) age brackets but to guarantee a minimum of well-being to everybody. The intent of pensions is to provide such a basic income to people in their advancing years, when work is more difficult to undertake or to obtain. The evidence from the State/Market program is that this goal is achieved, for two- thirds of pensioners are able to get by without borrowing or spending savings, and five-sixths go through the year without often having to do without basic necessities. VI. COMPARING PENSIONERS AND THE WORKING AGE POPULATION 66. The above evidence shows that it is wrong to associate poverty with being of pension age. It also raises the question: To what extent are people of working age as likely to be in poverty as pensioners? 67. Limited difference in capacity to get by, avoid severe deprivation. Comparisons of people of working and pension age inevitably identify differences, even after allowance is made for substantial differences in household composition. Pensioners are active in fewer economies than are younger people, and their portfolios differ too, for older people are more likely to be defensive and younger people to be enterprising (Table 7). Page 21 The Baltic States: Pensioners, Gender and Poverty Table 7: Differences Between Pensioners and Working-Age Population Pensioners Working-Age Difference Money income: Mean individual 100 187 -87% Household: % Color television 64 81 -17% % Car 26 44 -18% % Telephone 63 63 0 Getting by 67 69 -2% Often deprived 23 14 -9 (7-9 destitution scale) Source: Baltic State and Market survey; see Table 1 68. The average person of working age reports an income 87 percent higher than the average pensioner. Since there are usually more people earning an income in non-pension households, total household income is also higher. However, since three-fifths of non-pension households have children, the larger household income must provide for more people. In terms of material goods, the households of working age people have more possessions; they are 17 percent more likely to have a color television set and 18 percent more likely to have a car. 69. There is virtually no difference in the percentage of working age households and of pensioners that can get by; two-thirds in both groups can do so. There is a greater tendency for pensioners often to be deprived of food, heating and clothes. A total of 23 percent of pensioners are often deprived compared to 13 percent of those of working age. 70. Among those of working age, 48 percent live in households with two adults and children; 22 percent live with another adult or alone and without children; 15 percent have three or more adults plus children; and 14 percent have three or more adults and no children. Whereas Page 22 The Baltic States: Pensioners, Gender and Povert differences in types of household are significant for pensioners, differences among household do not cause a substantial difference in the capacity to get by or the mean level of deprivation. 71. Need most often found amona those of working age. Because people of pension age are little more than a quarter of adults in the Baltic states, when we look at the total adult population, pensioners are shown to be a minority of those in economic difficulties. 72. Of those who have trouble getting by (Figure 6A), the largest group are families with children. Altogether, working-age households are 72 percent of all households in difficulty; pension householders are little more than a quarter of those not getting by. When attention is turned to the sixth of households often doing without food, clothes or heat, pensioners are the largest single group, but they constitute less than two-fifths of those often doing without. Three- fifths often doing without are families of working age (Figure 6B). 73. Need in the Baltics involves more children and their parents rather than pensioners. When we tabulate the number of people of all ages in need, including children, pensioners become an even smaller group. When a lone widow often has to do without, only one person is immediately affected. The presence of children in a needy household multiplies the impact of need. When a family with two children has to do without, four times as many people are directly affected as in a widow's home. 74. Among all those living in households having trouble getting by, only nine percent are pensioners. Children are 30 percent of those having trouble getting by and adults of working age are 61 percent (Figure 7). Even when allowance is made for the fact that sometimes pensioners and non-pensioners live in the same household, more than four-fifths of those not getting by are found in households where difficulties cannot arise from low pensions because there is no pensioner in the household. VII. POLICY IMPLICATIONS 75. The average wage is a poor guide in setting the cash value of a pension, for the average wage-earner does not earn enough to live on. In economies in transition, the three "pillars" are: i) the household's total pool of income from wages and/or pensions; ii) household production without any money changing hands; and iii) cash earnings from unofficial shadow economies. Page 23 The Baltic States: Pensioners, Gender and Poverty Reliance upon a multiplicity of incomes and economies is likely to continue indefinitely and should be taken into account in setting pension levels. 76. Short-term needs require short-term not long-term assistance. In a time of transition, most people have short-term difficulties in getting by or obtaining food, clothing or heat, and this includes pensioners. However, these difficulties are intermittent rather than continuing. Hence, benefits for the very needy, including pensioners, should have a definite time limit specified in weeks or months, and individuals should have to re-register a claim if they are continuously in need. 77. Raising the value of pensions cannot be iustified as social protection against dire need, because the extent of need among non-pensioners is much the same as among pensioners in the Baltic states. Thus, across the board increases in pensions would be an inefficient form of social protection. 78. Targeting benefits, that is, directing limited funds to those most in need--promotes effectiveness by increasing the number of persons being helped, and promotes efficiency by reducing the waste resulting from providing benefits to those who do not need help. 79. Widows and widowers living alone are the pensioners with most difficulties. Because household resources are important, older people who live alone are most likely to have difficulties. Moreover, living alone is usually not a matter of choice; it results from the death of a spouse. Hence, any increase in pensions should be disproportionately awarded to widows and widowers living alone. 80. The failure of objective characteristics such as age to target people in need does not deny that some households are in severe economic difficulties. Careful consideration should be iven to expanding locally determined social assistance, subject to centrally controlled budgets. In principle, local authorities ought to be best at identifying those most in need, and able to make payments promptly. Increasing local discretion would require firm central limits on total spending by local authorities and should be done by agencies accountable to local people through the local political process. Measures being taken in Latvia, for example, to increase local discretion in paying benefits to the most needy should be monitored to see what lessons can be learned at the local and national levels. Page 24 The Baltic States: Pensioners, Gender and Poverty 81. The minimum age for a pension in the Baltics is low by OECD standards, and sorne people are drawing pensions even below the age of 55 or 60. With twenty years or more of life ahead, they cannot be described as "too old" for work. This means that the number drawing pensions below the official retirement age should be reduced. 82. Gradually raising the retirement age is the easiest way to finance social assistance for the elderly most in need. Raising the pension age will not reduce the years a person can enjoy retirement, given the increase in life expectancy since relatively low thresholds for retirement were established. Furthermore, the European Court of Justice decision in September, 1994 ordering employers to offer the same age of retirement to both sexes will almost certainly result in raising the age of retirement for women in the European Union. 83. A life-cycle approach to social protection. Pensions cannot be viewed in isolation. They are an integral part of a system of social insurance reaching across generations and embracing the whole population of a society. The relative weight given children, working-age people and those in retirement is a political decision. Since revenue is limited, this decision can best be made after considering the opportunity cost of spending more on all pensioners or targeting grants to people having difficulty in getting by or facing temporary or long-term destitution. 84. A life-cycle approach starts by recognizing that needs differ in childhood, adulthood and old age. In moving through the life cycle, an individual's claims on public benefits vary: an individual benefits most when young and old. As long as the ties of family are strong--and this appears to be the case in the Baltic states--even those who are not immediately the targets of programs will indirectly benefit if their children or their elderly parents are helped. For example, any assistance targeted on children is also of benefit to their parents. It can also be appreciated by their grandparents, pensioners for whom the future is represented by their grandchildren. 85. Middle-age is a time when individuals not only have maximum earning power but also may be liable to support children and, in some circumstances, retired parents too. Public policies that benefit children and the retired thus reduce the inter-generational pressures upon people who are fit and active in their 40s. 86. The progress from middle-age to retirement is gradual, initially signalled by the death of a parent or in-law. Survivors, especially lone widows, have problems that may be resolved by themselves, their offspring, the state or by a combination of these three. In the fullness of Page 25 The Baltic States: Pensioners, Gender and Poverty time, individuals who have been both children and parents become grandparents and pensioners. At this point they hope to benefit from measures that they have contributed to for decades--and to prepare for the end with the knowledge that the surviving spouse will be looked after and their offspring and grandchildren are all right. Page 26 The Baltic States. Pensioners, Gender and Povert REFERENCES Atkinson, A.B. and Micklewright, John, 1992. Economic Transformation in Eastern Europe and the Distribution of Income. Cambridge: Cambridge University Press. Bureau of the Census, 1992. An Aini World II. International Population Reports P25, 92-3. Washington, D.C.: U.S. Government Printing Office. European Centre for Social Welfare and Research, 1993. Welfare in a Civil Society. Vienna: European Center. Falconer, Peter and Rose, Richard, 1991. Older Britons: A Survey. Glasgow: U. of Strathclyde Studies in Public Policy No. 194. Grossman, Gregory, 1977. "The Second Economy of the USSR", Problems of Communism, 26,5, 25-40. Fox, Louise, 1994. Old-Age Security in Transitional Economies. Washington, D.C.: World Bank Policy Research Department Working Paper 1257. Holzmann, Robert, 1992. "Social Policy in Transition from Plan to Market", Journal of Public Policy, 12,1, 1-35. Katsenelinboigen, A., 1977. "Coloured Markets in the Soviet Union", Soviet Studies, 29,1, 62- 85. Kornai, Janos, 1992. The Socialist System: the Political Economy of Communism. Princeton: Princeton University Press. OECD, 1994. OECD In Figures. Paris: OECD Supplement to the OECD Observer No. 188, June/ July. Polish Statistical Association, 1992. Poverty Measurement for Economies in Transition in Eastern European Countries. Warsaw: Central Statistical Office. Page 27 The Baltic States: Pensioners, Gender and Poverty Rose, Richard, 1986. "Common Goals but Different Roles: the State's Contribution to the Welfare Mix". In R. Rose and Rei Shiratori, eds., The Welfare State East and West. New York: Oxford University Press, 13-39. Rose, Richard, 1993. "Contradictions between Micro and Macro-Economic Goals in Post- Communist Societies", European-Asian Studies (formerly, Soviet Studies), 45,3, 419-444. Rose, Richard, 1994. "Getting by Without Government: Everyday Life in Russia", Daedalus, 123,3, 41-62. Rose, Richard, 1994a, "Who Needs Social Protection in East Europe? A Constrained Empirical Analysis of Romania". In S. Ringen and C. Wallace, eds., Societies in Transition: East-Central Europe Today. Aldershot, England: Avebury, 175-220. Rose, Richard, forthcoming. DIPPIES: The Significance of Double Income Plural Pension Households. Glasgow: University of Strathclyde Studies in Public Policy. Rose, Richard and Maley, William, 1994. Nationalities in the Baltics: a Survey Study. Glasgow: University of Strathclyde of Strathclyde Studies in Public Policy No. 222. Rose, Richard and McAllister, Ian, 1993. Is Money the Measure of Welfare in Russia? Glasgow: University of Strathclyde Studies in Public Policy No. 215. Tanzi, Vito, ed. 1992. Fiscal Policies in Economies in Transition. Washington, D.C.: International Monetary Fund. World Bank, 1993. Historically Planned Economies: a Guide to the Data. Washington, D.C.: World Bank, 1993 edition. World Bank, 1993a. World Development Report 1993: Investing in Health (New York: Oxford University Press). World Bank, 1994. Averting the Old Age Crisis. Washington, D.C.: The World Bank. Page 28 ANNEXES Annex 1. Appendix Table 1: Key Characteristics of Older People by Country Annex 2. Figures Annex 1 Appendix Table 1: Key Characteristics of Older People by Country Estonia Latvia Lithuania Household type % % % Married couples 36 38 45 Multi-generational couples 14 24 22 Survivor, multi-generation 9 11 6 Living alone 40 27 27 Economic status Employed pensioner 22 19 17 Multi-generational 19 26 22 Couple, no job 38 30 37 Alone without a job 31 24 24 Portfolios of economies Enterprising 6 5 5 Defensive 44 43 56 Marginal 46 43 37 Vulnerable 4 8 2 Material goods Color television 64 66 60 Telephone 54 72 59 Car 30 24 22 Often doing without Food 29 39 33 Clothing, shoes 32 49 35 Heating, electricity 7 9 19 People often doing without (all ages) Adults of working age 61 65 65 Children 31 29 27 Adults of pension age 8 6 8 Getting by Yes 68 61 69 Spent savings 20 26 20 Borrowed 6 7 6 Spent savings and borrowed 6 5 5 People not getting by (all ages) Adults of working age 59 61 63 Children 32 30 27 Adults of pension age 9 9 10 Annex 2 FiLyures Figure 1: Households of Pensioners Figure 2: Employment and Household Status of Pensioners Figure 3: Number of Economies in Pension Households Figure 4: Money Income in Pension Households Figure 5: Degree of Doing Without Basic Goods Figure 6A: Households Unable to Get By Figure 6B: Households Often Doing Without Figure 7: Age of People Not Getting By Figure 8: Age of People often Doing Without Figure 1. HOUSEHOLDS OF PENSIONERS Living alone: women 26% Married couples 40% Living alone: men 5% Multi- gener'al family )9% Source: Analysis of men age 60 and above and women over 55 in Baltic State and Market survey, (N pensioners: 1,319; total number of respondents, 6,136). For full details, see Rose and Maley (1994). Figure 2. EMPLOYMENT AND HOUSEHOLD STATUS OF PENSIONERS Couple, no job 33% Alone without a job 24% Employed pensioner 22% Multi-gen., employed 20% Source: Baltic State and Market survey. Couple without a job includes 5 per cent who are living with a relative other than spouse. Figure 3. NUMBER OF ECONOMIES IN PENSION HOUSEHOLDS 4.2 4 3.9 3.7 3.1 3 2 1 0 - . O t Source: As in Figure 1; Baltic State and Market survey. Figure 4. MONEY INCOME IN PENSION HOUSEHOLDS (Total income of household; 100 equals mean) 100 92 90 87 0 80 70 61 60 50 40 30 28 20 10 0 Source. As in Figure I Baltic State and Market survey. Figure 5. DEGREE OF DOING WITHOUT BASIC GOODS (% Doing without food, heat, clothes) 40 30 20 14 1 Pensioners 10 12 10 10 10 1 9 9 6 Working age 7 5 4 0 0 Never 1 2 3 4 5 6 7 8 9 Often Source: Baltic State and Market survey. Scale created from questions about doing without food, heating, and clothes, scoring replies: 3=often; 2=sometimes; 1-rarely; 0-never. Figure 6A. HOUSEHOLDS UNABLE TO GET BY (Distribution by age, household type of the third unable to get by) Pensioners Working couple 28% 15% Three adults + child. 12% Three adults no child 10% Family with children 34% Source: Baltic State and Market survey; see Table 1. Figure 6B. HOUSEHOLDS OFTEN DOING WITHOUT (Distribution by age, household type of sixth high on destitution scale) Pensioners 37% Working couple 15% Three adults + child. 10% Three adults no child. 9% Family with children 29% Source: Baltic State and Market survey see Table 1. Figure 7. AGE OF PEOPLE NOT GETTING BY MAdults in working age households, 53% MChildren in working age households, 28% Pensioners, 9% EMYounger adults in pension households, 8% [!Children in pension households, 2% 2% 00 9% J, J 000 00000 00000000 000000000 0000000000 0000000000 00000000 000000 53%- .. . . . ...28%